General Mills Inc
The trend of consumers eating more meals at home is challenging for this division, Chief Executive Ken Powell said in a conference call.
Earnings in the third quarter that ended February 22 fell to $288.9 million, or 85 cents a share, from $430.1 million or $1.23 a share, a year earlier.
Excluding one-time items like changes in the market value of some commodity hedges, a gain from insurance settlement and tax expense, profit was 79 cents a share. Analysts on average were expecting 87 cents, which would have been flat with a year earlier, according to Reuters Estimates.
Sales for the maker of Progresso soup, Cheerios cereal and Yoplait yogurt rose 4 percent to $3.54 billion.
Sales fell 6 percent in its bakeries and food service segment. Showing that consumers were eating more meals at home, sales rose 5 percent in the U.S. retail segment's meals unit, which sells Green Giant frozen vegetables, Helper dinner mixes and Progresso ready-to-serve soup.
In the Pillsbury division, sales were up 15 percent, helped by demand for Pillsbury Savorings frozen appetizers and refrigerated dough items.
General Mills raised its full-year outlook, citing strong sales in the first nine months and lower costs in the current quarter.
The company has said it expects energy, ingredient and supply chain costs to be up 9 percent in fiscal 2009.
Although commodity costs have fallen from highs seen last year, companies argue that they are still up year over year. Some companies also entered contracts to buy commodities at those higher prices, and some of those contracts do not end until later this year.
But General Mills' fourth-quarter input costs will be well below the company's estimated rate for the full year, Powell said in a statement. Results will also benefit from an extra week of sales, he added.
General Mills now expects to earn $3.87 to $3.89 a share, excluding some items, for the fiscal year ending in May. It had previously forecast $3.83 to $3.87 on that basis.
Its shares were down $4.70, or 8.8 percent, at $48.96 on the New York Stock Exchange after falling as low as $48.45 earlier in the session.
(Reporting by Aarthi Sivaraman in New York and Brad Dorfman in Chicago; Editing by Derek Caney and Lisa Von Ahn)